Each week, we review over 150 banks and credit unions to find the best CD rates available nationwide. The top picks have the highest rates (APY) for that term and are available to the public.
We also look at certificates of deposit with slightly shorter and longer terms than each category we’ve named to determine the overall best CD rate within a range. For example, for the best 3-month CDs we considered products with terms of two to four months.
When multiple banks or credit unions offer the same rate, we favor those with the lowest minimum deposit and friendly early-withdrawal policies. We track APYs daily but re-evaluate the list weekly, and all accounts that make our list are insured by either the FDIC or the NCUA. Here are the best CD rates available as of Feb. 19, 2020.
Best CD Rates
|Term||Bank or Credit Union||APY||Minimum Deposit||Early Withdrawal Penalty|
|1.75%||$25,000||1 month of interest|
(5-9 months included)
|INOVA Federal Credit Union
|2.25%||$200||3 months of interest|
|INOVA Federal Credit Union
|2.25%||$200||6 months of interest|
(15-20 months included)
|Alabama Credit Union
|2.27%||$500||6 months of interest|
(21-29 months included)
|MAC Federal Credit Union
|2.40%||$1,000||3 months of interest|
|Fort Bragg Federal Credit Union
|2.58%||$25,000||3 months of interest|
|Fort Bragg Federal Credit Union
|2.78%||$25,000||3 months of interest|
|Fort Bragg Federal Credit Union
|2.99%||$25,000||3 months of interest|
|2.30%||$1,000||6 months of interest|
We partnered with QuinStreet to bring you the following CD offers, and below the table, you'll find our top picks for a variety of CD terms.
TotalDirectBank’s 3-month CD requires $25,000 to open and pays 1.75% APY. It also has an early-withdrawal penalty of one month’s interest. The bank is a division of City National Bank of Florida, which was founded more than 70 years ago. TotalDirectBank keeps the product lineup simple, with money market accounts and CDs with terms of up to five years. Anyone in the U.S. (except those in Florida, California, Puerto Rico, American Samoa, Guam, Northern Mariana Islands, and U.S. Virgin Islands) can open a money market or CD account.
INOVA Federal Credit Union was originally chartered in 1942 and offers share certificates (aka certificates of deposit) with a $200 minimum investment. The short-term rates are impressive, but long-term CDs pay significantly lower rates. On both the 6-month and 14-month certificates, you can earn an APY of 2.25%. Both of those terms have an early withdrawal penalty of three months’ worth of interest.
If you’re not already eligible to join INOVA, you can join the Tru Direction Financial Literacy Program with a $5 donation and $10 membership fee. You must also keep $5 on deposit at the credit union.
Low $200-minimum deposit
Access to CO-OP shared branches
Low rates on longer term CDs
Alabama Credit Union was founded in 1956 to serve the University of Alabama. Anyone nationwide can join after becoming a member of several organizations. For example, you can join the Secret Meals Foundation, which helps to feed hungry children, with at least $10. You must also keep $5 in savings. Alabama Credit Union’s 18-month certificate offers an APY of 2.27% for accounts funded with new money, with an early withdrawal penalty of up to six months’ interest.
$500 minimum for CDs
Limited information (such as FAQs) available online
MAC Federal Credit Union offers a 2-year certificate with an APY of 2.40% and an early withdrawal penalty of just three months’ interest. The minimum deposit to earn this great rate is also just $1,000. CD terms range from six months to four years, and the credit union also offers members financial products like checking, savings, and money market accounts, credit cards, insurance, and more.
Originally founded in 1952 to serve the active duty and civil service personnel in Fort Wainwright, Alaska, the credit union is now open to anyone who purchases a two-year membership for $40 to the Association of the United States Army. When applying for the membership, just change the chapter to the Polar Bear Chapter in Fort Wainwright, Alaska.
Great rate with a $1,000 minimum deposit
Belongs to the CO-OP shared branching network
$40 donation may eat up a substantial portion of interest earnings
Fort Bragg Federal Credit Union currently has a strong lineup of long-term certificates. As of Feb. 19, 2020, highlights include:
- A 3-year CD that pays 2.58% APY
- A 4-year CD that pays 2.78% APY
- A 5-year CD that pays 2.99% APY
The rates above require a minimum deposit of at least $25,000, and there’s a penalty of three months’ worth of interest if you withdraw funds before your CD matures. For these long-term CDs, that’s relatively flexible. Fort Bragg Federal Credit Union was originally chartered in 1960, and anyone nationwide can become a member. If you’re not already eligible, join the Association of the United States Army with a two-year membership for $40 and deposit at least $5 in savings with the credit union.
Relatively low early-withdrawal penalty
CO-OP shared branches available to members
$25,000 minimum required for the highest rates
If you don’t have $25,000 to deposit with Fort Bragg, you can earn a competitive rate at Transportation Federal Credit Union with a $1,000 minimum deposit. As of Feb. 19, 2020, the 5-year CD pays 2.78% APY.
MySavingsDirect is an online banking arm of Emigrant Bank, which was founded in 1850. CDs require $1,000 to open, and you can choose a term that fits your needs (there are only a few interest rate tiers to choose from). If you want a CD for just 119 months instead of 120 months—or a full 10 years—MySavingsDirect allows it. The 10-year CD offers an APY of 2.30% as of Feb. 19, 2020, with an early withdrawal penalty of up to six months’ interest.
Flexible terms can accommodate specific goals
Must add and withdraw funds by ACH only (no checks or wire transfers after initial funding) and may take up to four days
Unless you’re set on locking in a rate for 10 years, you’d be better off with this 7-year CD, which ties up your money for less time and offers a better rate: The Andrews Federal Credit Union 7-year CD has an APY of 3.05%, as of Feb. 19, 2020.
What Is a CD?
A CD is a “time deposit” that pays a fixed interest rate for a specific length of time. For most people, a CD is an account that you use at a bank or credit union, but you can also purchase CDs through brokerage accounts. Either way, you select a length of time to invest in the CD, and you earn interest during that time.
How Do CDs Work?
A CD holds your money for a specified length of time (such as six months or two years), and your bank or credit union pays you interest based on the amount of your deposit and the length of the term.
When you use a CD, you typically commit to leaving your money in the account. In return for that commitment, banks usually pay higher interest rates than they do in more liquid savings accounts. But if you need your money before the term ends, you may have to pay an early withdrawal penalty.
How Do Early Withdrawal Penalties Work?
Banks and credit unions often penalize you for withdrawing funds from a CD before the term is up. In many cases, they calculate the penalty as a certain number of months’ worth of interest. For example, Discover Bank charges six months’ worth of interest if you pull out of a 1-year CD early. That penalty increases to 18 months’ worth of interest on 5-year CDs.
Paying a penalty is never fun, and it can be particularly problematic when you cash out early in the term. Depending on how long your money stays in a CD, you might even receive less back than you originally deposited.
What Are the Pros and Cons of CDs?
Higher interest rates than savings accounts
Earnings won’t change if interest rates drop
Must lock up your money
Potential early withdrawal penalties
Might get stuck with a low rate while other interest rates rise
Pros explained: CDs often pay higher interest rates than you can earn in a savings account. Banks and credit unions tend to pay more when you agree to lock up your money for a specific length of time. Plus, if interest rates fall (and the bank pays new customers lower rates), you keep earning the same higher APY throughout the term of your CD.
Cons explained: To earn a higher rate, you need to commit to leaving your money with the bank. Pulling out early may result in early-withdrawal penalties, which can wipe out your earnings. Also, if interest rates rise, you may be stuck with a relatively low rate until your CD matures.
How Can You Manage These Risks?
To help reduce your risk, some banks offer liquid CDs that allow you to withdraw funds early or request a rate increase. But there’s no such thing as a free lunch. Those products might start with lower rates than standard CDs, which is only fair, considering you can get out easily. More on that in the No-Penalty CD section below. You can also use a laddering strategy to manage some of the challenges that come with investing in CDs.
What Is a CD Ladder?
A CD ladder is a set of multiple CDs you purchase with different maturity dates, which helps you avoid locking up all of your money at once. With that approach, you might purchase a series of CDs with maturities in six-month increments. As a result, you periodically have cash available for planned (and unplanned) needs, or you can buy a new CD at the going rate. For example, if you have $10,000 to put into CDs, you might invest the following:
- 6-month CD: $2,500
- 12-month CD $2,500
- 18-month CD $2,500
- 24-month CD: $2,500
Ideally, every time one of these CDs matures, you would buy a new 24-month CD with the proceeds to begin the cycle again.
Rates might be higher or lower when you reinvest into a new CD, but constantly cycling your money could still have benefits. You maintain flexibility and avoid putting all of your money into long-term CDs at a bad time.
Is Money Safe in a CD?
When your funds are federally insured, they’re safe from bank and credit union failures. There may be a brief delay in receiving your money (or no delay at all) immediately following a bank failure, but when you’re using CDs, you’re probably weren’t planning to use the funds immediately anyway. To verify that your cash is protected, look for the following types of coverage:
- FDIC insurance at banks
- NCUA coverage at federally-insured credit unions
Both of these programs insure your money up to $250,000 per depositor, per institution, so it’s critical to keep your balances below the insured limits. You might be able to have more than $250,000 insured at one place, depending on how your accounts are titled.
What Influences CD Rates?
Several factors affect how much you earn from a CD. For starters, banks decide how competitive they want to be. If they have an appetite for new customers, they may nudge rates higher. Economic factors also influence CD rates. As rates rise or fall in financial markets, savings and CD rates tend to move in synchrony, although they might not react immediately (especially when it’s time to pay you more).
The length of your CD is critical. In general, you might expect longer-term CDs to pay more because you’re taking more risk—you’re committing to more months or years of unknowns. But the relationship is not always as direct as you might think. For example, if banks think rates might fall in the next several years, long-term CDs might pay rates that are similar to (or lower than) 1-year and 2-year CDs.
As a rule of thumb, long-term CDs have higher rates than short-term CDs. Still, it’s worth comparing rates from several banks for any terms you’re interested in.
What Should You Look for in a CD?
As you shop among banks, find a CD that’s the best fit for your finances. Pay careful attention to the features below.
- Interest rate: The higher the rate, the faster your money grows. The easiest way to compare rates is to use the annual percentage yield (APY), which banks typically provide for you. That quote takes compounding frequency into account, and helps you make an apples-to-apples comparison.
- Minimum deposit: How much do you need to invest to use a CD? Some banks do not set any minimum, while others might require more than $1,000 to get started.
- Fees: Monthly fees in CD accounts are rare, but it's smart to verify that you won't pay additional charges to use a CD. Anything you pay will reduce your earnings.
- Joining fees: All of the credit unions we include on our best CD lists are available nationwide, but sometimes you’re required to make a donation to an organization in order to join the credit union. This fee is usually small, but it’s one more hoop you have to jump through to get the CD.
- Penalties: Examine the early-withdrawal penalties, and evaluate how likely it is that you’ll need to cash out early. Weigh the pros and cons of liquid CDs.
Calculate how much extra you can earn by getting the highest rate available, and decide if that’s what you really need. If you have a relatively small account balance, a difference of a few tenths of a percent may not make much difference and there may be other factors that are more important to you.
As you compare banks, you may notice language about compounding frequency (daily or monthly compounding, for example). All other things being equal, more frequent compounding is best. But you can ignore those details by simply comparing each bank’s APY, which includes compounding.
What Is a No-Penalty CD?
Some CDs allow you to withdraw money before maturity. These “no-penalty” or “liquid” CDs can provide flexibility for unexpected expenses and other situations. For example, you might be allowed to withdraw 100% of the money you deposit after six days, but the account pays a guaranteed rate of interest for 11 months.
What’s the catch? In many cases, no-penalty CDs start with a lower rate than standard, inflexible CDs. You enjoy the benefit of flexibility, and the bank has less certainty about how long it can use your money. As a result, you earn slightly less.
Do You Have to Pay Taxes on Interest From CDs?
You typically have to pay tax on interest you earn from CDs in taxable accounts, including joint accounts, individual accounts, and other types of accounts. If you use CDs in a retirement account, such as an IRA, you generally would not pay taxes on the earnings each year—but you might owe taxes when you take distributions from that account.
Tax rules are complicated, and they change periodically. Ask your tax advisor how to handle interest you earn from your CDs.
What Are Some Alternatives to CDs?
CDs are excellent tools for growing your money, but other products from banks and credit unions might also do the job.
Savings accounts provide more flexibility when you need money, but they don’t have fixed rates. That can work in your favor when rates rise. But if rates fall or remain stagnant, you might be better off in a CD.
Money Market Accounts
These are similar to savings accounts, but they may make it easier to spend money from your account. Some money market accounts provide a debit card or checkbook for spending, while others may require you to move your savings to a checking account before you spend.
INOVA Federal Credit Union. "Become a Member," click "Join INOVA Today." Accessed Feb. 19, 2020.
Alabama Credit Union. "Eligibility." Accessed Feb. 19, 2020.
Association of the United States Army. "Individual Membership." Accessed Feb. 19, 2020.
Discover Bank. "Certificate of Deposit." Accessed Feb. 19, 2020.